Corporate Employers & The Problem of Trade Secrets

November 09, 2018
By
Roman & Gaynor

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Most people have some sense of the term “trade secrets.” When
you hear it, you probably think of things like the recipe for Coke, or
customer lists stashed in the boss’s office. However, corporate
America interprets the term in a much broader way — and employment
relationships can get complicated and contentious when employers assert
their expansive trade secret claims.

In litigation, big companies claim virtually all of their company papers
are trade secrets. In the long history of our Clearwater injury attorneys
of Roman & Gaynor, we have actually seen grocery store chains claim
that employee manuals — which are given to any bagboy or cashier
when they begin work — are trade secrets that should be kept secret
from the world. Apparently, if you are to believe their inference, any
employee who begins work at minimum wage can be trusted with trade secrets,
but anyone who undertakes a legitimate investigation of company policies
cannot. The truth is that companies involved in litigation really do not
stay up at night worrying about a lawyer receiving a customer service manual.

The goal of these companies is to thwart their opponents from sharing information,
making their work more expensive and difficult. Many people will never
deal with this issue. However, they may have to deal with another problem:
facing threats when they move on from a company and try to get a job in
the same industry.

Non-Compete Agreements, Google, Uber & More

Many employers force new employees to sign “non-compete” agreements
when they begin work, and then try to enforce them when the employees
leave. Even workers who do not sign “non-compete” agreements
can be vulnerable to corporate advances and attempts at manipulation.
That is because companies often claim the training and skills an employee
learns on the job are trade secrets. Again, this is not just legitimately
secret stuff like the recipe for Coca-Cola or KFC’s blend of spices.

Companies will often claim the things in an employee’s head cannot
be transferred anywhere else. To give just one example of how this can
go, consider the case of Google in Silicon Valley.

In February 2018, a Google affiliate sued Uber for poaching a valued former
employee. It claimed that Uber lured the employee away because the employee
had valuable trade secrets, and said that it had been damaged in the astonishing
amount of about $1.85 billion dollars. Uber fought back, though.

As the case wound its way through the court system, it became obvious just
how dubious the claims really were. The original claims were whittled
down to just eight purported thefts of trade secrets. The case went to
trial in February 2018, and even the eight remaining claims seemed to
go over poorly. Facing the prospect of a huge loss, Google quietly settled
the case before a verdict. The value of the settlement, about $250 million,
was a tiny fraction of the original claim.

How to React to Trade Secret Claims

Unfortunately, not everyone threatened with non-compete or trade secret
claims has the resources of Uber. Many people get intimidated when they
get a “cease and desist” letter from a law firm hired by a
former employer. They may find it easier to forego a job opportunity than
engage in a legal battle. These lost opportunities have tremendous aggregate
economic costs, and they can stifle innovation and technological progress.

Besides the obvious advice to always read any agreement carefully before
you sign it, if you have been threatened by a former employer, you should
seek legal advice on regarding your options. You may find out that the
threats of legal action put forth by that employer might not stand up
in court. Furthermore, some former employers will just back down when
they hear a former employee has a lawyer of their own. As in so many other
areas, it pays to know your rights, and know when to seek legal guidance.

Contact Roman & Gaynorand our team of Clearwater attorneys for more information about your rights.
You can dial
727.877.1212 to schedule a free consultation.